[Federal Register Volume 62, Number 137 (Thursday, July 17, 1997)]
[Notices]
[Pages 38257-38263]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18871]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-357-005]


Cold-Rolled Carbon Steel Flat-Rolled Products From Argentina; 
Preliminary Results of Countervailing Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of preliminary results of countervailing duty 
administrative review.

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the countervailing duty order on cold-rolled 
carbon steel flat-rolled products from Argentina. For information on 
the net subsidy, see the Preliminary Results of Review section of this 
notice. If the final results remain the same as these preliminary 
results of administrative review, we will instruct the U.S. Customs 
Service to assess countervailing duties as indicated in the Preliminary 
Results of Review section of this notice. Interested parties are 
invited to comment on these preliminary results.

EFFECTIVE DATE: July 17, 1997.

FOR FURTHER INFORMATION CONTACT: Richard Herring, Office of CVD/AD 
Enforcement VI, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 
482-2786.

SUPPLEMENTARY INFORMATION:

Background

    On April 26, 1984, the Department published in the Federal Register 
(49 FR 18006) the countervailing duty order

[[Page 38258]]

on cold-rolled carbon steel flat-rolled products from Argentina. On May 
6, 1992, the Department published a notice of ``Opportunity to Request 
an Administrative Review'' (57 FR 19412) of this countervailing duty 
order. We received a timely request for review from U.S. Steel Group, a 
unit of USX Corporation.
    We initiated the review, covering the period January 1, 1991 
through December 31, 1991, on June 18, 1992 (57 FR 27212). The review 
covers two producers/exporters of the subject merchandise, Sociedad 
Mixta Siderurgica Argentina (SOMISA) and Propulsora Siderurgica, 
S.A.I.C. (Propulsora), which account for all exports of the subject 
merchandise from Argentina, and 20 programs.
    On September 17, 1993, petitioners brought timely new allegations 
to the Department concerning the provision of tax concessions and 
preferential natural gas and electricity tariff rates to steel 
producers. Petitioners cited alleged tax concessions provided to the 
steel industry under Paragraph 8 of the April 11, 1991 Steel Agreement 
between the Government of Argentina (GOA) and Argentine steel 
producers, and preferential natural gas and electricity rates provided 
under Paragraph 6 of the Steel Agreement. On November 15, 1993, the 
Department requested information from the GOA on these alleged subsidy 
programs.
    On January 1, 1995, the effective date of the Uruguay Round 
Agreements Act of 1994 (the URAA), certain countervailing duty orders 
involving World Trade Organization (WTO) signatories which had been 
issued without an injury determination by the International Trade 
Commission (ITC) became entitled to an ITC injury determination under 
section 753 of the URAA. The order on cold-rolled carbon steel flat-
rolled products did not receive an ITC injury investigation and 
Argentina was a member of the WTO. On May 26, 1995, the Department 
published a notice allowing domestic parties an opportunity to seek an 
injury test regarding this and other countervailing duty orders. See 
Countervailing Duty Order; Opportunity to Request a Section 753 Injury 
Investigation, 60 FR 27963. For this order on cold-rolled carbon steel 
flat-rolled products from Argentina, no domestic interested parties 
requested an injury investigation. As such, the ITC made a negative 
injury determination with respect to this order, pursuant to section 
753(b)(4) of the URAA. Thus, the Department revoked this countervailing 
duty order, effective January 1, 1995, pursuant to section 753(b)(3)(B) 
of the URAA. See, Revocation of Countervailing Duty Orders, 60 FR 40568 
(August 9, 1995).

The Ceramica Decision by the Court of Appeals for the Federal 
Circuit

    On September 6, 1995, the Court of Appeals for the Federal Circuit, 
in a case involving imports of Mexican ceramic tile, ruled that, absent 
an injury determination by the ITC, the Department may not assess 
countervailing duties under 19 USC 1303(a)(1) (1988, repealed 1994) on 
entries of dutiable merchandise after April 23, 1985, the date Mexico 
became ``a country under the Agreement.'' Ceramica Regiomontana S.A. v. 
U.S., 64 F.3d 1579 (Fed. Cir., 1995) (Ceramica).
    Argentina attained the status of ``a country under the Agreement'' 
on September 20, 1991. Therefore, in consideration of the Ceramica 
decision, the Department, on April 2, 1996, initiated changed 
circumstances administrative reviews of the countervailing duty orders 
on Leather, Wool, Oil Country Tubular Goods (OCTG), and Cold-Rolled 
Carbon Steel Flat-Rolled Products (Cold-Rolled Steel) from Argentina, 
which were in effect when Argentina became a country under the 
Agreement. See Initiation of Changed Circumstances Countervailing Duty 
Administrative Reviews: Leather from Argentina, Wool from Argentina, 
Oil Country Tubular Goods from Argentina, and Cold-Rolled Carbon Steel 
Flat Products from Argentina, 61 FR 14553 (April 2, 1996). These 
reviews focused on the legal effect, if any, of Argentina's status as a 
``country under the Agreement,'' and whether the Department has the 
authority to assess countervailing duties on these orders. Because we 
had ongoing administrative reviews of the orders on OCTG and Cold-
Rolled Steel that covered review periods on or after September 20, 
1991, we also had to determine whether the Department had the authority 
to assess countervailing duties on unliquidated entries of subject 
merchandise occurring on or after September 20, 1991, when Argentina 
became a ``country under the Agreement'' and before January 1, 1995, 
the date that Argentina became a ``Subsidies Agreement country'' within 
the meaning of section 701(b) of the URAA.
    On April 29, 1997, the Department determined that it lacked the 
authority to assess countervailing duties on entries of OCTG and Cold-
Rolled Steel from Argentina made on or after September 20, 1991 and 
before January 1, 1995 (62 FR 24639; May 6, 1997). As a result, we 
terminated the pending administrative reviews of the countervailing 
duty order on OCTG covering 1992, 1993, and 1994, as well as the 
pending administrative reviews of the countervailing duty order on 
Cold-Rolled Steel covering 1992 and 1993.
    However, because the 1991 review covers a period before Argentina 
became a ``country under the Agreement,'' we must continue the 1991 
administrative review to determine the amount of countervailing duties 
to be assessed on entries made between January 1, 1991 and September 
19, 1991. Entries of subject merchandise made on or after September 20, 
1991 will be liquidated without regard to countervailing duties.

Applicable Statute

    The Department is conducting this administrative review in 
accordance with section 751(a) of the Tariff Act of 1930, as amended 
(the Act). Unless otherwise indicated, all citations to the statute are 
in reference to the provisions as they existed on December 31, 1994.

Scope of the Review

    Imports covered by the review are shipments of Argentine cold-
rolled carbon steel flat-rolled products, whether or not corrugated or 
crimped; whether or not painted or varnished and whether or not 
pickled; not cut, not pressed, and not stamped to non-rectangular 
shape; not coated or plated with metal; over 12 inches in width and 
under 0.1875 inches in thickness whether or not in coils; as currently 
provided for under the following item numbers of the Harmonized Tariff 
Schedule (HTS):

7209.11.00, 7209.12.00, 7209.13.00, 7209.14.00, 7209.21.00, 7209.22.00, 
7209.23.00, 7209.24.00, 7209.31.00, 7209.32.00, 7209.33.00, 7209.34.00, 
7209.41.00, 7209.42.00, 7209.43.00, 7209.44.00, 7209.90.00, 7210.70.00, 
7211.30.50, 7211.41.70, 7211.49.50, 7211.90.00, 7212.40.50

The HTS item numbers are provided for convenience and Customs purposes. 
The written description remains dispositive.

Calculation Methodology for Assessment and Cash Deposit Purposes

    We calculated the net subsidy on a country-wide basis by first 
calculating the subsidy rate for each company subject to the 
administrative review. We then weight-averaged the rates received by 
each company using as the weight each companies share of total 
Argentine exports to the United States of subject merchandise, 
including all companies, even those with de minimis and zero rates. We 
then summed the weight-averaged rates to determine the subsidy rate 
from all programs benefitting

[[Page 38259]]

exports of subject merchandise to the United States.
    Since the country-wide rate calculated using this methodology was 
above de minimis, as defined by 19 CFR Sec. 355.7 (1994), we proceeded 
to the next step and examined the net subsidy rate calculated for each 
company to determine whether individual company rates differed 
significantly from the weighted-average country-wide rate, pursuant to 
19 CFR Sec. 355.22(d)(3). Propulsora had a significantly different net 
subsidy rate during the review period pursuant to 19 CFR 
Sec. 355.22(d)(3). Therefore, this company is treated separately for 
assessment purposes. All other companies are assigned the country-wide 
rate.

Analysis of Programs

I. Programs Conferring Subsidies

A. Programs Previously Determined to Confer Subsidies

1. Rebate of Indirect Taxes (Reembolso/Reintegro)
    The Reembolso program provides a cumulative rebate of indirect 
taxes paid upon export and is calculated as a percentage of the f.o.b. 
invoice price of the exported merchandise. The Department will find 
that the entire amount of any such rebate is countervailable unless the 
following conditions are met: (1) The program operates for the purpose 
of rebating prior stage cumulative indirect taxes and/or import 
charges; (2) the government accurately ascertained the level of the 
rebate; and (3) the government reexamines its schedules periodically to 
reflect the amount of actual indirect taxes and/or import charges paid. 
In prior investigations and administrative reviews of the Argentine 
Reembolso program, the Department determined that these conditions have 
been met, and, as such, the entire amount of the rebate has not been 
countervailed (see, e.g., Cold Rolled Carbon Steel Flat-rolled Products 
from Argentina, Final Results of Countervailing Duty Administrative 
Review (56 FR 28527; June 21, 1991); Oil Country Tubular Goods from 
Argentina, Final Results of Countervailing Duty Administrative Review 
(56 FR 64493; December 10, 1991).
    However, once a rebate program meets this threshold, the Department 
must still determine in each case whether there is an overrebate; that 
is, the Department must still analyze whether the rebate exceeds the 
total amount of indirect taxes and import duties borne by inputs that 
are physically incorporated into the exported product. If the rebate 
exceeds the amount of allowable indirect taxes and import duties on 
physically incorporated inputs, the Department will find a 
countervailable benefit equal to the difference between the Reembolso 
rebate rate and the allowable rate determined by the Department (i.e., 
the overrebate).
    To determine whether there was an overrebate during the review 
period, the Department requested the GOA to provide information on any 
changes to the Reembolso program for cold-rolled steel. According to 
the information provided, the program continued to be governed by 
Decree 1555/86, which modified the Reembolso program and set precise 
guidelines to implement the refund of indirect taxes and import 
charges. The decree established three broad rebate levels covering all 
products and industry sectors. The rates for levels I, II and III were 
10 percent, 12.5 percent, and 15 percent, respectively. Based on the 
GOA's 1986 calculation of the tax incidence in the cold-rolled carbon 
steel industry, this industry was classified in level I.
    In April 1989, the GOA suspended cash payment of rebates under the 
Reembolso program. Pursuant to the Emergency Economic Law dated 
September 25, 1989 (Law 23,697), the suspension of cash payments was 
continued for an additional 180 days. Rebates accrued during the 
suspension period were to be paid in export credit bonds. On March 4, 
1990, the entire program was suspended for 90 days by Decree 435/90. 
Decree 1930/90 suspended payments of the reembolso for an additional 
12-month period.
    Decree 612/91 dated April 10, 1991, reinstated cash payments of the 
indirect tax rebates and import charges and reduced the rate for the 
cold-rolled carbon steel industry from 10 percent to 6.7 percent. 
Therefore, during the period of review, rebates were suspended from 
January through April 10, 1991, and the rebate rate was 6.7 percent 
from April 11 through December 31, 1991.
    Using the information provided in the questionnaire response, we 
calculated the allowable tax incidence for the subject merchandise 
based on an updated study which SOMISA provided to the GOA in 1991. We 
found that the rebate of taxes did not exceed the total amount of 
allowable cumulative indirect taxes and/or import charges paid on 
physically incorporated inputs, and prior stage indirect taxes levied 
on the exported product at the final stage of production. Therefore, we 
preliminarily determine that there was no benefit from this program 
during the review period.
2. Equity Infusions
    In our final determination in the investigation (see Certain Cold-
Rolled Carbon Steel Flat-Rolled Products from Argentina; Final 
Affirmative Countervailing Duty Determination and Countervailing Duty 
Order (49 FR 18006; 1984), we found that the GOA provided a series of 
countervailable equity infusions to SOMISA under Decree 2887/78. This 
decree authorized government reimbursement of debt expenditure, 
including payment of interest, commissions and other fees, in exchange 
for equity in SOMISA. SOMISA was also found to be unequityworthy from 
1978 through 1983.
    In our Final Results for the 1987 review (see Certain Cold-Rolled 
Carbon Steel Flat-Rolled Products from Argentina; Final Results of 
Countervailing Duty Administrative Review (56 FR 120; June 21, 1991), 
we found that the Argentine Treasury continued to provide equity 
infusions to SOMISA from 1984 through 1987 pursuant to Decree 2887/78, 
and that SOMISA continued to be unequityworthy throughout this period. 
No new information or evidence of changed circumstances has been 
submitted in this proceeding to warrant reconsideration of this 
determination.
    We have reviewed SOMISA's financial statements for the years 1988 
through 1990, and have determined that the Argentine Treasury provided 
additional equity infusions pursuant to Decree 2887/78 through 1990. In 
order to determine whether SOMISA was equityworthy during this period, 
we applied the analysis described in the General Issues Appendix 
attached to the Final Affirmative Countervailing Duty Determination: 
Certain Steel Products From Austria (GIA) (58 FR 37225; July 9, 1993). 
The results of this analysis have been filed on the official record of 
this review. See Memorandum to Barbara E. Tillman, Director Office of 
CVD/AD Enforcement VI, Regarding Certain Cold-Rolled Carbon Steel Flat-
Rolled Products from Argentina: Equityworthiness of Somisa During 1988, 
1989 and 1990 dated April 4, 1997 on file in the Central Records Unit, 
Room B099 of the Main Commerce Building. Based on this evaluation of 
the financial statements, SOMISA continued to be unequityworthy 
throughout this period.
    We have determined that these equity infusions are nonrecurring 
benefits and have allocated them over time. See GIA (58 FR 37226-27). 
Also, consistent with

[[Page 38260]]

our equity methodology as stated in the GIA at 58 FR 27239-44, we have 
treated these infusions as grants in order to determine the subsidy 
conferred from these infusions. The benefit from each of the equity 
infusions was then calculated using the declining balance methodology 
as described in the GIA at 58 FR 37227, and used in prior 
investigations and reviews.
    In addition, consistent with the prior administrative review of 
this order, we have converted the equity infusions into U.S. dollars 
because of the periods of hyperinflation in Argentina and the changes 
in the Argentine currency during this time period. This methodology has 
also been used in other countries where hyperinflation and changes in 
currency were an issue. See, e.g., Final Affirmative Countervailing 
Duty Determination: Certain Steel Products from Brazil, 58 FR 37295 
(July 9, 1993). Because we have converted the equity infusions into 
dollars to account for hyperinflation and changes in national currency, 
we must use a long-term discount rate in dollars. For our discount 
rates, we have used the interest rates for long-term U.S. dollar 
lending in Argentina for private creditors as published in the World 
Bank Debt Tables: External Debt of Developing Countries. Long-term U.S. 
dollar rates were also used from this World Bank source in Certain 
Steel Products from Brazil.
    When this review was initiated and until recently, our allocation 
periods were determined by using the average useful life of a firm's 
renewable physical assets as set forth in the U.S. Internal Revenue 
Service's 1977 Class Life Asset Depreciation Range System. Based on 
this IRS table, the average useful life of assets in the steel industry 
is 15 years. However, based on a recent decision by the Court of 
International Trade, we have modified our policy and we now base the 
allocation period on company-specific average useful life of assets 
(AUL). See British Steel et al. vs. United States et al., 929 F. Supp. 
426, (1996 CIT). Therefore, we provided SOMISA an opportunity to submit 
its company-specific AUL. SOMISA stated that due to the difficulty in 
calculating a company-specific AUL due to the periods of 
hyperinflation, it requested that the 15 year period specified in the 
IRS tables be used as the allocation period. In light of the periods of 
hyperinflation, we find that it would be unduly burdensome to require 
the company to submit actual AUL data. Therefore, in circumstances such 
as here where company-specific AUL is not reasonably available, we are 
basing the allocation period on the 15 year AUL listed in the IRS tax 
tables for this administrative review.
    Using the above-described methodology, we determined the benefit to 
SOMISA from each of these equity infusions during the review period. We 
totaled these amounts to arrive at the total benefit received by SOMISA 
from all of these infusions during the review period. We then divided 
this amount by total sales during 1991 to calculate a subsidy of 1.54 
percent ad valorem for the review period for all companies except 
Propulsora which had a significantly different net subsidy rate for the 
review period pursuant to 19 CFR 355.22(d)(3). The program-specific 
rate for Propulsora under this program is 0.00 percent.

B. New Program Preliminarily Found to Confer Subsidies

Regional Tariff Zones for Natural Gas
    While investigating the allegation of preferential natural gas 
rates to the steel industry, we discovered that companies located in 
different regions of the country paid different prices for natural gas. 
During the period of review, Argentina was divided into nine tariff 
zones for the purposes of determining the actual price of natural gas 
paid by the consumer. Within each zone, a separate coefficient was 
established to reflect the costs of transportation of natural gas 
within the country. This coefficient was applied against the published 
tariff rates to determine the actual price of natural gas for the 
consumer. For example, in Zone I which covers Buenos Aires and the 
surrounding countryside, the coefficient was 100 percent. Therefore, a 
consumer of natural gas in Zone I paid 100 percent of the published 
tariff rate for natural gas, while in Zone IX, the coefficient was 45 
percent; therefore, a consumer located in Zone IX paid 45 percent of 
the published tariff rate.
    As noted above, these zones were established to take into account 
the costs of transportation of natural gas within the country. Thus, 
zones located further from the natural gas fields would have a higher 
coefficient and, therefore, would have paid a higher price for natural 
gas than those located closer to the natural gas fields. Propulsora was 
located in Zone I, therefore, it paid 100 percent of the published 
tariff rate, while SOMISA was located in Zone II and paid 95 percent of 
the published tariff rate.
    These tariff zones were established during 1981 and 1982 and were 
based upon a study conducted by Gas del Estado (GdE), the state-owned 
utility company. There was no follow-up to the original study and the 
zones have remained consistent since that time except for some slight 
modifications in two of the zones. We verified this program during our 
concurrent 1991 administrative review of OCTG, which covered the same 
allegations of preferential pricing of natural gas to the steel 
industry. During verification, we requested to review the original 
study which led to the creation of the zones and the coefficients. We 
were informed by GdE officials that because of the age of the study and 
the fact that it contained only historical data, the study was no 
longer available. (See the report of the Verification of the Government 
of Argentina's Response in the 1991 Administrative Review of Oil 
Country Tubular Goods from Argentina (public version), which has been 
put in the public file for the instant review, and can be found in the 
Central Records Unit, Room B099 of the Main Commerce Building.)
    Under longstanding Department practice, programs which provide 
subsidies on a regional basis are countervailable. See, e.g., Final 
Affirmative Countervailing Duty Determination: Fresh and Chilled 
Atlantic Salmon from Norway, 56 FR 7678 (February 25, 1991) and Final 
Affirmative Countervailing Duty Determination; Certain Fresh Atlantic 
Groundfish from Canada, 51 FR 10041 (March 24, 1986). Because the 
original study establishing the tariff zones in Argentina was done 10 
years prior to our period of review, was never subsequently up-dated, 
and because the GOA could not document the criteria used to establish 
these tariff zones, we preliminarily determine that the lower rates 
charged in zones other than Zone I constitute regional subsidies.
    Because Propulsora was located in Zone I and paid the full 100 
percent of the published rate, we find that it did not benefit from 
this program. SOMISA was located in Zone II and paid only 95 percent of 
the established tariff rate for natural gas, therefore, we 
preliminarily determine that it received a countervailable benefit 
under this program. To determine the amount of the benefit received by 
SOMISA during this review period, we calculated the amount the company 
would have paid during 1991 for natural gas if it were required to pay 
the full 100 percent of the published natural gas tariff rates. We then 
deducted from this amount the amount for natural gas that it actually 
did pay during 1991. We then divided the difference by total sales in 
1991, and calculated a subsidy of 0.30 percent ad valorem for the 
review period for all companies, except Propulsora which

[[Page 38261]]

had a significantly different net subsidy rate for the review period 
pursuant to 19 CFR 355.22(d)(3). The program-specific rate for 
Propulsora under this program is 0.00 percent.

II. Program Preliminarily Found Not to Confer Subsidies

Preferential Natural Gas Tariffs Under Resolution 192/91

    At the end of 1990, Argentina was emerging from an extended period 
of hyperinflation. The GOA believed that deregulating and privatizing 
the large, state-owned utility companies would lead to price stability 
by introducing competition in the market. The beginning of this 
deregulation can be found with the passage of Decree 633. Also, within 
this context, the GOA entered into sectoral agreements with Argentine 
industries in order to secure commitments from industries that they 
would hold down prices charged to their customers in order to stabilize 
the inflation rate within the economy. In exchange for this commitment, 
the GOA committed itself to broad based economic reforms, including the 
maintenance of stable energy prices.
    In early 1991, the GOA began the first steps toward deregulating 
the natural gas market in Argentina. Up until April 1991, the GOA set 
and regulated the tariff rates for natural gas in the country. Prices 
for natural gas could not deviate from those prices set by the Economy 
Minister. In April 1991, with the enactment of Decree 633, two separate 
markets for natural gas were created. The first market was the 
wholesale market which covered transactions between producers and 
distributors as well as between producers and large users of natural 
gas. The other market created by Decree 633 was the retail market which 
covered sales to residential and other commercial consumers. Under 
Decree 633, companies in the wholesale market were permitted to engage 
in negotiations and to enter into individual contracts for natural gas.
    In April 1991, while the GOA was deregulating the prices of natural 
gas in the wholesale market, the GOA also began to reduce the tariff 
rates for natural gas in the retail market with the passage of 
Resolution 192/91. Resolution 192/91 established new tariff rates which 
were approximately 20 percent lower than the prior published rates in 
Resolution 29/91. The rates established under Resolution 192/91 were 
effective from April 1, 1991 through December 31, 1992. We were 
informed by the GOA during the verification of the concurrent 1991 
administrative review of OCTG, that not all companies in Argentina 
received the reduced rates under Resolution 192/91. (See the report of 
the Verification of the Government of Argentina's Response in the 1991 
Administrative Review of Oil Country Tubular Goods from Argentina 
(Public Version), which has been put in the public file for the instant 
review, and can be found in the Central Records Unit, Room B099 of the 
Main Commerce Building.) The tariff rates for natural gas in Argentina 
were announced in resolutions published by the Economy Minister. In 
order to qualify for the reduced rates, certain companies had to 
provide documentation to the government that they voluntarily avoided 
price increases and thus contributed to the avoidance of inflation and 
currency devaluation in the country. These companies were listed in 
Resolution 71/91.
    By April of 1991, companies in Argentina could seek to obtain 
reduced natural gas prices by two means. If the company qualified as a 
large consumer of natural gas, it could seek to negotiate its own rate 
with the utility company, or it could seek to qualify for the reduced 
rates which were published in Resolution 192/91. Neither SOMISA nor 
Propulsora negotiated individual contracts for natural gas during the 
period. In addition, SOMISA did not qualify for the reduced tariff 
rates published under Resolution 192/91, and it continued to pay the 
higher tariff rates established under Resolution 29/91 for the rest of 
1991. Propulsora did qualify for the reduced rates under Resolution 
192/91 and it paid the reduced tariffs from April 1991 through December 
31, 1991. Therefore, we must determine whether the reduced tariffs 
under Resolution 192/91 provided Propulsora with a countervailable 
benefit.
    On March 27, 1991, the Ministry of Economy published Resolution 
192/91, which set the new tariff rates for natural gas. These new rates 
became effective on April 1, 1991. These revised rates under Resolution 
192/91 applied to both home and non-home consumption of natural gas. 
Under Section 4 of Resolution 192/91, the tariff rate listed in Annex V 
applied to businesses, official agencies, and industries. However, 
Section 17 of Resolution 192/91 stated that in order to be entitled to 
the tariff rates listed in the resolution, corporations listed in 
Resolution 71/91 had to submit evidence that they met the obligations 
listed in Resolution 71/91. Companies listed in Resolution 71/91 had to 
get a certification in order to qualify for the tariff rates published 
in Resolution 192/91. A certification meant that the company was 
assisting in maintaining price stability in the country by holding down 
prices. Companies not listed in Resolution 71/91 automatically 
qualified for the revised tariff rates published in Resolution 192/91.
    Resolution 71/91 was published by the Ministry of Economy on 
February 22, 1991. In the period leading up to the publication of 
Resolution 71/91, there was high wholesale and retail inflation in 
Argentina. According to the GOA, it was, therefore, necessary to 
implement a policy for the domestic market to assist in price 
stabilization to deal with the self-perpetuating hedging based on the 
future expectation of inflation. In this environment, companies would 
raise prices in expectation of the next month's inflation. Resolution 
71/91 was published in order to dampen this price escalation.
    The list of companies published in Resolution 71/91 was compiled 
using three sources: (1) Large taxpayers as determined by the Direccion 
General Impositiva, the Argentine tax collection agency; (2) price 
setting enterprises as determined by the Commerce Secretary; and (3) 
companies known by the Banco Nacional de la Republica Argentina to have 
a significant amount of indebtedness. There were a total of 1,566 
companies listed in Resolution 71/91. Companies named in this list had 
to provide the GOA with information that they ``voluntarily avoided 
price increases'' during the months of February and March 1991, thereby 
contributing to the avoidance of price inflation and currency 
devaluation.
    If companies listed in Resolution 71/91 demonstrated to the 
government that they ``voluntarily avoided price increases,'' they were 
provided with a certificate from the Ministry of Economy which could be 
presented to GdE. With the presentation of this certificate, GdE would 
then allow the company to use the reduced tariff rates for natural gas 
published in Resolution 192/91.
    Propulsora was listed in Resolution 71/91 and had to provide 
evidence demonstrating that it ``voluntarily avoided price increases.'' 
Based on the information it provided to the government, it was provided 
with a certification which made it eligible for the reduced tariff 
rates under Resolution 192/91. Effective April 1, 1991, Propulsora's 
natural gas tariff rates were based on those set in Resolution 192/91. 
SOMISA did not receive a certification and, therefore, was not eligible 
for the reduced tariff rates. It continued to pay the higher tariff 
rates from the previous tariff schedule under Resolution 29/91. In 
order to determine whether the tariff rates announced in Resolution 
192/91

[[Page 38262]]

provided a countervailable benefit to Propulsora, we must first 
determine whether the rates provided in that resolution are limited to 
a specific enterprise or industry, or to a group of enterprises or 
industries as required under section 771(5) of the Act.
    Under Resolution 192/91, all companies and businesses are 
automatically eligible for tariff rates set forth in this Resolution 
unless the company or business is listed in Resolution 71/91. Companies 
listed in Resolution 71/91 had to be certified by the government to 
qualify for the reduced tariffs in Resolution 192/91. Eighty-five 
percent of the companies that applied for certification for the tariffs 
in Resolution 192/91 (462 companies) were approved for the reduced 
natural gas rates. In deciding whether to approve an application, the 
GOA uniformly applied the criteria specified in Resolution 71/91 to 
each applicant.
    All companies and businesses in Argentina that were not listed in 
Resolution 71/91, and 462 companies and businesses listed in Resolution 
71/91 which received certifications paid the Resolution 192/91 tariff 
rate for natural gas. These companies and businesses represent 
virtually all industries in Argentina. Therefore, we preliminarily 
determine that the published tariff rates listed in Resolution 192/91 
are not limited, by law, or in fact, to an enterprise or industry or to 
a group of enterprises or industries as required under section 771(5) 
of the Act. As such, we preliminarily determine the rates under 
Resolution 192/91 to be non-countervailable.

III. Programs Preliminarily Found Not To Be Used

    We examined the following programs and preliminarily find that the 
producers and/or exporters of the subject merchandise did not apply for 
or receive benefits under these programs during the period of review:

 Preferential Electricity Tariff Rates

    Until April 1991, the tariff rates for electricity were set by the 
government. On April 17, 1991, the GOA published Decree 634/91, which 
provided for the deregulation of the electricity industry in Argentina. 
This decree created two market levels for electricity in Argentina, the 
wholesale market and the retail market. The wholesale market was 
comprised of the producers, generators, and distributors of electricity 
as well as the large individual consumers of electricity. Under Decree 
634, the producers and generators would sell electricity through a 
central dispatch agency. The distributors would then purchase the 
electricity from this central dispatch agency for delivery to the 
individual consumer. In order to encourage competition within the 
wholesale market, a large individual consumer could negotiate a 
contract with any utility company within the country. Although large 
consumers could negotiate contracts for electricity in the wholesale 
market, the tariff rates charged to individual consumers in the retail 
market were still set by the government.
    During the review period, both SOMISA and Propulsora continued to 
purchase electricity at the published tariff rates for businesses and 
companies in Argentina, and they did not negotiate individual contracts 
with utility companies. Therefore, we preliminarily determine that this 
program was not used during the period of review and need not reach the 
issue of whether the program is otherwise countervailable.

 Privatization Assistance Under Law 23696 and Decree 1144/92

    In 1989, the GOA embarked upon a reform program designed to 
restructure the economy, stabilize the currency, refinance the public 
debt and reduce the public sector. A central element of this program 
was the privatization of large public enterprises. The general 
privatization law, Chapter II of Law 23696, published on August 17, 
1989, established procedures for the transfer of state assets to the 
private sector. Among other provisions, it provides that the Executive 
Branch may (1) decide which assets will be privatized; (2) reorganize 
going concerns and transfer assets and liabilities from those concerns 
prior to privatization; and (3) assume the debt of public enterprises 
undergoing privatization.
    Law 23696 requires that before an entity may be privatized, the 
Executive Branch must declare it subject to privatization and an Act of 
Congress must be promulgated. SOMISA was one of twenty-six companies 
under the aegis of the Ministry of Defense that were declared subject 
to privatization on July 23, 1990. Congress ratified that declaration 
in Act 24045 on December 31, 1991. As stated above, Law 23696 allows 
the GOA to reorganize state-owned companies which are to be privatized 
and to also assume the debt of state-owned companies undergoing 
privatization. Although SOMISA was not privatized until November 1992, 
we must examine whether SOMISA received any countervailable benefits 
under this GOA program during 1991, our period of review. Propulsora is 
a privately-held company and, therefore, did not fall under the purview 
of Law 23696.
    In order to qualify for the treatment of debt specified under Law 
23696, a company must be partially or wholly-owned by the government, 
and be the subject of either privatization or liquidation. Under Law 
23696, any type of liability, whether derived from labor or social 
security obligations, customs duties, lawsuits, contract disputes, 
fines or penalties, or liabilities that arose from the normal 
functioning of business could be assumed directly by the government. 
Under Law 23696, SOMISA's public sector debt acquired before April 1, 
1991, was eligible for consolidation and assumption by the GOA. 
Although the debt acquired by SOMISA before April 1, 1991 was covered 
under Law 23696, the actual assumption of SOMISA's debt by the 
government was not authorized until 1992, under Decree 1144/92. Decree 
1144/92, which was enacted July 15, 1992, also (1) canceled all of 
SOMISA's debt acquired from April 1, 1991 until January 1, 1992; (2) 
exempted SOMISA from the stamp tax and from other taxes which are 
imposed on the transfer of assets and land; and (3) stated that the GOA 
would assume SOMISA's labor-related obligations incurred prior to its 
privatization.
    Decree 1144/92, which authorized SOMISA's debt consolidation and 
assumption was not enacted until after the period of review and there 
was no debt assumption or forgiveness during the period of review. 
Therefore, we preliminarily determine that SOMISA did not receive any 
benefits during the period of review from the debt consolidation and 
assumption under Law 23696, nor did it receive benefits under Decree 
1144/92 during the period of review.
    The following programs also were not used during the review period:
     Medium- and Long-Term Loans.
     Capital Grants.
     Income and Capital Tax Exemptions.
     Government Trade Promotion Programs.
     Exemption from Stamp Taxes Under Decree 186/74.
     Incentives for Trade (Stamp Tax Exemption Under Decree 
716).
     Incentive for Export.
     Export Financing Under OPRAC 1, Circular RF-21.
     Pre-Financing of Exports Under Circular RF-153.
     Loan Guarantees.
     Post-Export Financing Under OPRAC 1-9.
     Debt Forgiveness.

[[Page 38263]]

     Tax Deduction Under Decree 173/85.

IV. Program Preliminarily Found Not to Exist

1. Tax Concessions for the Steel Industry

    Petitioners alleged that, under Paragraph 8 of the April 11, 1991 
Steel Agreement between the GOA and Argentine steel producers, the GOA 
provides the steel industry with tax concessions. According to the 
response of the GOA, Paragraph 8 of the Steel Agreement does not 
provide tax concessions to the steel industry but merely states that 
the industry's Reembolso level will be studied taking into account the 
tax incidence of steel producers. For information on the Reembolso/
Reintegro program, see the section ``Rebate of Indirect Taxes,'' above. 
Therefore, we preliminarily determine that there were no new tax 
concessions provided to the steel industry under the Steel Agreement.

Preliminary Results of Review

    For the period January 1, 1991 through December 31, 1991, we 
preliminarily determine the net subsidy to be 0.00 percent ad valorem 
for Propulsora and 1.84 percent ad valorem for all other companies.
    If the final results of this review remain the same as these 
preliminary results, the Department intends to instruct the U.S. 
Customs Service to assess the following countervailing duties:

------------------------------------------------------------------------
                                                                 Rate   
                   Manufacturer/exporter                      (percent) 
------------------------------------------------------------------------
Propulsora.................................................         0.00
All Other Companies........................................         1.84
------------------------------------------------------------------------

    The Department also intends to instruct the U.S. Customs Service to 
assess these countervailing duties on entries of the subject 
merchandise covered by this administrative review for the period 
January 1, 1991 through September 19, 1991, and to liquidate all 
entries made on or after September 20, 1991, without regard to 
countervailing duties. This countervailing duty order was revoked 
effective January 1, 1995. As such, no further instructions will be 
sent to Customs regarding cash deposits.
    Parties to the proceeding may request disclosure of the calculation 
methodology and interested parties may request a hearing no later than 
10 days after the date of publication of this notice. Interested 
parties may submit written arguments in case briefs on these 
preliminary results within 30 days of the date of publication. Rebuttal 
briefs, limited to arguments raised in case briefs, may be submitted 
seven days after the time limit for filing the case brief. Parties who 
submit argument in this proceeding are requested to submit with the 
argument (1) a statement of the issue and (2) a brief summary of the 
argument. Any hearing, if requested, will be held seven days after the 
scheduled date for submission of rebuttal briefs. Copies of case briefs 
and rebuttal briefs must be served on interested parties in accordance 
with 19 CFR 355.38(e).
    Representatives of parties to the proceeding may request disclosure 
of proprietary information under administrative protective order no 
later than 10 days after the representative's client or employer 
becomes a party to the proceeding, but in no event later than the date 
the case briefs, under section 355.38(c), are due.
    The Department will publish the final results of this 
administrative review including the results of its analysis of issues 
raised in any case or rebuttal brief or at a hearing.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.

    Dated: July 10, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-18871 Filed 7-16-97; 8:45 am]
BILLING CODE 3510-DS-P